Behind Goldman’s Ire Over a Bank Tax

Goldman Sachs was debating holding a fundraiser for the National Republican Congressional Committee when the discussions fizzled, the Wall Street Journal reported. The reason: a proposal by a Republican lawmaker to tax large financial institutions.

The proposal by House Ways and Means Committee Chairman Dave Camp has galvanized Wall Street in a way largely unseen since the financial crisis. And their lobbying is winning some support. On Friday, 54 Republicans signed a letter to Mr. Camp conveying “deep concerns” about the bank tax, including tea party leaders like Rep. Michele Bachmann (R., Minn.).

Why are Wall Street firms reacting so strongly? After all, the proposal is not likely to move anywhere in an election year. And the idea is not new: President Obama proposed something similar in 2010.

The problem for big banks is the idea now has bipartisan support, meaning it could pop up again as lawmakers in both parties look to overhaul the tax code and offset new spending proposals. The proposal is expected to bring in about $86 billion over 10 years and could cost some firms as much as $2 billion per year, according to analysts and industry representatives.

“When you allow something like this to be put on the shelf, [it could be] pulled down at any time,” James Ballentine, the chief lobbyist American Bankers Association, told the Journal earlier this month.

The industry is also mobilizing quickly because they had little inkling the proposal was coming, despite the fact that they had been advocates of tax reform and been in discussions with Mr. Camp for months.

Banks first heard about the idea about a week before Mr. Camp released his proposal as rumors began circulating a bank tax may be included. One Republican aide reported receiving calls from the top in-house lobbyists at J.P. Morgan Chase & Co., Citigroup Inc., and Bank of America Corp. on Thursday, Feb 20, almost a week before Mr. Camp’s proposal was released. “They were very, very clear on the phone that ‘If this is in here we are not only going to oppose the bill, [we] will actively campaign against it,’” said the aide.

On the Saturday before the Feb. 26 proposal came out, banks and their trade groups took the phones before breakfast, hoping first to get Mr. Camp to reconsider and, if that failed, to organize the push back on the Hill.

The work has had some impact, with other House Republicans are distancing themselves from the bill. House leadership has been telling lobbyists that the proposal is Mr. Camp’s alone, according to people familiar with those conversations.

Will there be more fundraisers canceled? Perhaps not.

Goldman Sachs continues to make contributions from its political-action committee to both Democrats and Republicans and plans to host fundraisers for both parties in coming months, according to a person at the bank.

The financial industry “can temporarily cancel some events to make a point,” said Sam Geduldig, a Republican lobbyist and partner at Clark Geduldig Cranford & Nielsen. “But at the end of the day, highly regulated industries don’t have the option of not participating in Washington, and part of that participation is fundraising, for both parties.”

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